Air Permitting Aggregation Controversy – Pennsylvania is Battleground
On October 6, 2012 the Pennsylvania Department of Environmental Protection (PA DEP) published their “Guidance for Performing Single Stationary Source Determinations for the Oil and Gas Industries” which details the criteria which must be used by air permit reviewers to determine whether different facilities under common control and ownership should be “aggregated” and treated as a single source for air permitting. PA DEP’s guidance largely mirrors recommendations from the oil and gas industry that the common sense notion of “adjacent” be used to determine whether nearby sources should be combined and that sources that are more than ¼ mile from one another are not normally considered to be adjacent. This guidance was eagerly awaited and the PA DEP received 366 public comments regarding their draft guidance document.
The issue of “aggregation” in air permitting has been controversial for more than 20 years but has come to a head in the past few years with the proliferation of unconventional shale gas extraction and associated gas pipeline operations. Environmental activist organizations in Pennsylvania have filed lawsuits contending that PA DEP should aggregate Marcellus Shale gas wells, pipeline compressor stations, and gas treatment plants into single sources and to impose major source permitting requirements on these operations. The environmental groups have expressed concerns that permitting multiple minor sources like gas pipeline compressor stations in close proximity to one another effectively bypasses major source permitting requirements including ambient air quality impact assessments, securing emission offsets for nonattainment areas, and employing lowest achievable emission rate pollution control technologies.
The U.S. EPA made an aggregation determination for Summit Petroleum Corporation in Michigan requiring that their natural gas sweetening plant should be aggregated with production wells and pipelines located up to eight miles from the plant. EPA’s regulations require that multiple activities be aggregated into a single source if they are under common control, belong to the same industrial grouping, and are on “one or more contiguous or adjacent properties.” EPA has long held that facilities that are “truly interrelated”, dependent on one another, or where one acts as a support facility, should be considered “contiguous or adjacent” even if they are located several miles from one another. On August 7, 2012 the Sixth Circuit Court of Appeals rejected EPA’s determination in the Summit case and found that EPA’s position regarding interrelationship of facilities is not a sufficient basis for their aggregation into a single source. The Summit decision seems to support the PA DEP’s October guidance and the “common sense” adjacency criterion of ¼-mile distance.
In Pennsylvania there are at least three legal cases pending regarding the aggregation issue for oil and gas operations. In May 2011, the Clean Air Council (CAC) appealed the issuance of an air permit to Markwest Liberty Midstream & Resources, LLC for their Houston Gas Plant in Washington County. The CAC contends that the gas plant should be aggregated with the gas compressor stations and other gas gathering and treatment operations that transport gas to the Houston Gas Plant and that are under common ownership. This case is pending before the Environmental Hearing Board. The CAC has also submitted comments to the PA DEP on numerous natural gas compressor station air permits and raised the issue of aggregation among others as part of a self-described “legal blitz”. The CAC is concerned about PA DEP’s expedited review process for minor sources like compressor stations and has also petitioned US EPA to sanction PA for violating the Clean Air Act in restricting public participation.
Similar appeals and lawsuits regarding aggregation have been filed by Citizens for Pennsylvania’s Future (PennFuture), G.A.S.P., and other environmental activist groups. A recent federal court opinion in the PennFuture v. Ultra Resources case ruled that PennFuture could bypass the PA DEP permit appeal process and file an action in federal court challenging construction of seven compressor stations that had been issued “general permits” by PA DEP. PennFuture argued that the general permits were inappropriate and allowed the circumvention of major source air permitting. It remains to be seen how the federal lawsuit will be decided and what impact it will have on PA DEP’s aggregation guidance.
Liberty Environmental’s air quality practice has been assisting industrial clients with complex air permitting issues including aggregation for many years. We have recently been assisting Pennsylvania oil and gas industry clients prepare single source determinations to demonstrate that aggregation of compressor stations and gas processing plants is not appropriate under EPA interrelatedness criteria and under PA’s aggregation guidance. In light of the heightened interest in this issue by environmental activist groups, we recommend that oil and gas clients include such determinations with their air permit applications.
For download as a PDF, please use this link Air Permitting Aggregation in the Oil & Gas Industries